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28 April 2016updated 09 Sep 2021 12:11pm

Tax avoidance is denying the world’s forgotten children a future

The simple fact is that children in the world’s poorest countries are not getting the services they need because their governments are not being paid the taxes they are due. 

By Mike Kane

While the major political repercussion of the Panama Papers was to spark a new trend for the publication of personal tax returns, we risk missing a much more important lesson: governments across the world are being denied income that could be invested in life-saving public services.

According to the leaked documents, the energy company Heritage Oil instructed Mossack Fonseca to transfer its registration from the Bahamas to Mauritius in order to avoid over £280m in tax on the sale of an oil field in Uganda. This is far more than the £172 million that the Ugandan Government will spend on health this year, and more even than the £272 million total projected health spending in the country for 2015-16. This is just one transaction, and it could have doubled the country’s health budget.

The simple fact is that children in the world’s poorest countries are not getting the services they need because their governments are not being paid the taxes they are due. Governments of developing countries collect much less tax as a proportion of their GDP than rich countries do – between 10 and 20 per cent as opposed to 30 to 40 per cent. One aspect of this problem is ineffective domestic tax collection, but the other is international tax avoidance. Children will continue to be denied life-saving services until less developed countries can raise their own revenue as effectively as OECD countries can.

This has real human consequences. While the number of people living in extreme poverty has halved since the establishment of the Millennium Development Goals in 2000, the Sustainable Development Goals pose a much greater challenge: eradicating extreme poverty by 2030, by reaching the hardest to reach. A new report from Save the Children, launching their Every Last Child campaign, leaves no doubt about who is being left behind. The hardest to reach children are those who have been excluded or discriminated against – because they are a girl, because they are disabled, because they are a refugee.

We cannot allow exclusion to leave children behind, and we cannot meet the Sustainable Development Goals without meeting them for everyone. The most sustainable way of doing this is to ensure governments have enough money to invest in the public services that level the playing field and ensure every child has access to healthcare and learning.

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But increasing revenue alone is not enough. The world’s forgotten children must be empowered to hold their governments to account to make sure any increase in revenue guarantees them a future. 

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Mike Kane is Shadow Minister for International Development and Member of Parliament for Wythenshawe and Sale East. He tweets @MikeKaneMP